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Land Bank Presentation 1
Annual Financial Results 2018/19
Land Bank Presentation 2Land Bank Presentation 2
Agenda
1. Opening remarks by the Programme Director: Mr. Sydney Soundy
2. Welcome address by the Chairman of the Board: Mr. Arthur Moloto
3. Introductory Presentation by the Acting Chief Executive Officer: Ms. Konehali Gugushe
4. Financial Presentation by the Acting Chief Financial Officer: Mr. Yatheen Ramrup
5. Questions & Answers
6. Lunch
Land Bank Presentation 3
Annual Financial Results 2018/19
Opening Remarks by the Programme Director:
Mr. Sydney Soundy
Land Bank Presentation 4
Annual Financial Results 2018/19
Welcome Address by the Chairman of the Board:
Mr. Arthur Moloto
Land Bank Presentation 5
Annual Financial Results 2018/19
Introductory Presentation by the Acting Chief Executive Officer:
Ms. Konehali Gugushe
Land Bank Presentation 6Land Bank Presentation 6
Table of Contents
1. Organisational Overview
2. Agricultural Overview
3. Our Strategy
4. Performance Overview
5. Looking Forward
Land Bank Presentation 7
Organisational Overview
• About Land Bank
• Land Bank Mandate
Land Bank Presentation 8Land Bank Presentation 8
About Land Bank
Land Bank Presentation 9
Land Bank Mandate
The Mandate of the Land Bank , the Constitution and the National Development Plan highlights the importance of the agriculture sector to the country’s development and transformation agenda…
Mandate
The objects, as per the Land Bank Act, No. 15 of 2002, are the promotion, facilitation and support of:
• Equitable ownership of agricultural land, in particular increasing ownership of agricultural land by HDI’s Agrarian reform, land redistribution or development programmes aimed at HDI persons;
• Land access for agricultural purposes;• Agricultural entrepreneurship;• Removal of the legacy of racial and gender discrimination in agriculture;• Enhancing productivity, profitability, investment and innovation;• Growth of the agricultural sector and better use of land;• Environmental sustainability of land and related natural resources;• Rural development and job creation;• Commercial agriculture; and• Food security.
Land Bank Presentation 10
Agricultural Overview
• Agricultural Overview
• Climate Risk
Land Bank Presentation 11Land Bank Presentation 11
Agricultural Overview
-10.8-19.7
-11.2-6.2
-12.5 -11.7-4.4 -4.3
31.742.8
47.8 44.9
-33.7-42.3
13.77.9
-13.2
-50-40-30-20-10
0102030405060
% C
HA
NG
E
Real growth rate in agriculture, forestry and fishing industry
Source: Land Bank, compiled from Stats SA data
• Agricultural Conditions was a significant contributor on theBanks ability to create value and to deliver developmentimpact.
• Sector growth declined (-4.8% year-on-year) due to:
sustained drought in several areas,
late start to the grain planting season; and
diseases in various livestock sectors.
• The sector also faced a number of unexpected challenges suchas:
the listeriosis crisis,
outbreaks of foot-and mouth disease that halted meatand wool exports,
uncharacteristic hail in usually hail-free areas; and
drier weather conditions in some parts of the country.
Land Bank Presentation 12
Agricultural Overview
The Agbiz/IDC Agribusiness
Confidence Index was at 42 at the end of
2018 with an increase to 46 during Q1 of
2019
• Uncertainty around regulatory proposals for land expropriation without compensation remains a strategic risk for the Land Bank.
• The report by the Advisory Panel on Land Reform and Agriculture that was submitted to the President on 28 July 2019 and pointedtowards a holistic approach to land reform.
• In our opinion, if the proposal is well executed as part of the broader land reform programme, expropriation (with or without)compensation has the potential for some significant economic and social benefits for the economy of South Africa and to theagricultural sector in particular.
• The agricultural sector relies heavily on the availability of land as one of its key factors of production. The land reform process may havea potential positive result though if more land is brought into production.
Source: Agbiz/IDC & Stats SA
Land Bank Presentation 13
Climate Risk
Climate change has been identified as one of the most
significant risks for a South African organisation that is wholly
committed to the agricultural sector:
• Increases in temperature;
• Drier conditions and drought;
• Soil degradation; and
• Loss of biological diversity are critical risks to southern
Africa.
This poses the following risks to the Group:
• More frequent and longer lasting droughts in certain parts of
the country;
• High variability in rainfall patterns which affect soil moisture
and therefore growing periods;
• More instances of heat-wave days and fire-danger days; and
• Unpredictable outbreaks of diseases both in location and
commodity.
Land Bank Presentation 14
• Value Creation Model
• Comprehensive Development Financing System
• Principles for Responsible Banking
Our Strategy
Land Bank Presentation 15Land Bank Presentation 15
Value Creation Model
Land Bank Presentation 16Land Bank Presentation 16
Comprehensive Development Financing System
Land Bank Presentation 17
Principles for Responsible Banking
• Land Bank and 29 other Banks from across the globe
under the auspices of the UNEP-FI have developed the
Principles for Responsible Banking (PRB).
• This represents the most progressive and comprehensive
framework to guide banks towards a sustainable future.
• The PRB are aligned with the SDGs, Paris Agreement and
regional and national frameworks.
• On 29 July 2019 the Land Bank Board approved Land Bank
becoming a signatory to the PRB on 22 September 2019.
Land Bank Presentation 18
Performance Overview
• Transformation Focus
• Performance Overview
• Development Highlights
• Environmental & Social Responsibility
Land Bank Presentation 19Land Bank Presentation 19
The absolute value of transformational loans as a percentage of the loan book is 17.5%.
Approximately R2 billion of this meet the narrow definition of development
Transformation focus
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Transformation 0 0 0 0 1 1.7 2 2.3 2.5 4.9 5.5 7.9
Commercial 15.9 14.2 13.7 15.3 21.4 26.2 32.1 35.5 36.5 38.4 40.1 37.3
0
5
10
15
20
25
30
35
40
45
50
R b
illio
n
Growth of R5.6 billion in our Transformational Loan Book since FY2015 while only
an increase of R1.8 billion in Commercial Loans
Land Bank Presentation 20Land Bank Presentation 20
Performance Overview
Land Bank Presentation 21Land Bank Presentation 21
Development Highlights
Interest Rate Subsidies
R58.7 million
Women owned enterprises supported
R103 million(33)
Youth owned enterprises supported
R19 million (17)
CSI Spent
R5.2 million
Procurement spent on suppliers with BBBEE 1 to 4
R86.8 million(95%)
Drought Relief approved since 2016
R377.4 million
Land Bank continues to strengthen their development contribution
Land Bank Presentation 22
Environmental & Social Responsibility
• We increased our capacity in this function to integrate the assessment of Environmental and Social risk by appointing a second Environmental Officer.
• Frontline office and management staff received training on the assessment and management of ESS risks and opportunities.
• All new loan applications undergo comprehensive screening and monitoring as per our Environmental and Social Management System. 351 applications were reviewed.
• We are conducing an environmental impact baseline assessment on farms engaged in lending with Land Bank and will use the outputs to inform our future ESS actions and climate strategy.
• We have made progress in rolling out environmental and social risk analysis to our SLA partners.
Land Bank Presentation 23
Looking Forward
Land Bank Presentation 24
Looking Forward
• Our focus for FY2020 is to grow our profit by driving top-line
growth.
• Plan to disburse R3.0 billion to development and
transformational transactions.
• Identify Agri - Entrepreneurs that require start-up funding
through our sector training projects.
• Identify additional sources of funding to support development
transactions.
• Concentrate on integrating the Principles for Responsible
Banking into our strategy.
• Conclude the development of the climate change strategy.
Land Bank Presentation 25
Integrated Results Launch FY2018/19
Financial Presentation by the Acting Chief Financial Officer:
Mr. Yatheen Ramrup
Land Bank Presentation 26
Highlights
• Strong Balance Sheet and solid Financial Performance
• Healthy Capital Adequacy Ratio (CAR)
• Strong Liquidity position
• Prepayment and Settlement of R2.7 billion of Government Guaranteed loans
• Resolution of majority of legacy distressed assets (Profert, LDFU)
• Silico Transaction – Creation of largest black grain handler in SA
• R5.07 billion disbursed loans for transformation
• Transformational loans increased to R7.9 billion, 17% of the loan book (12% inFY2018)
• Creation of R600m Hortfin Fund established
• Creation of Sinking fund with an initial investment of R500 million (currentlyR1.0 billion)
• Reduction in Post Retirement Medical Aid Liability
• First Black crop insurance assessors programme launched in the country totrain 20 Black assessors
Land Bank Presentation 27
Lowlights
• Persistent drought in western parts of country, specifically North Westand Western Free State:
Increase in NPL’s and Impairment - 8.8% (6,7% FY2018)
Reduction in operating profit
• Delayed growth in loan book due to late rains and late planting
• Net Interest Margin - 2.7% (3.0% FY2018)
Pre – payment penalties incurred on early settlement of facilities linked tosovereign downgrade
Delayed growth in the loan book
Land Bank Presentation 28
Group
Financial Overview
Land Bank Presentation 29Land Bank Presentation 29
Salient Features - Group
Performance Overview: Summary
Var % FY2019 FY2018
Net interest income (5.4%) R 1,206.0m R 1,278.4m
Impairments +100% R 324.7m R 55.5m
Operating expenses (4.0%) R 628.3m R 654.5m
Profit from Continuing Operations (42.0%) R 168.3m R 290.2m
- Banking Operations (53.1%) R 130.6m R 278.7m
- Insurance Operations +100% R 37.7m R 11.5m
Cash 33.3% R 3.2bn R 2.4bn
Investments 19.2% R 3.1bn R 2.6bn
Net loans and advances 2.5% R 44.5bn R 43.4bn
Total assets 5.6% R 52.4bn R 49.5bn
Key Ratios
Net interest margin (10.0%) 2.7% 3.0%
Cost-to-income ratio (5.6%) 57.1% 60.5%
Non-performing loans (5.6%) 8.8% 6.7%
Land Bank Presentation 30
Bank
Financial Overview
Land Bank Presentation 31
Performance Overview
Profit from Continuing Operations – Banking Operations
-100
0
100
200
300
OpexNIR/E
-269.1
PFCO FY2018
82.6
-60.3
Impairments
130.6
-3.7
Indirect tax & Other
PFCO FY2019
R m
illio
n
278.7
25.9
76.5
NII Other income
-53.1%
Profit for the year Var % FY2019 FY2018
Net interest income (4.8%) 1,201.1 1,261.4
- Interest Income 4.1% 5,023.5 4,827.0
- Interest Expense (4.5%) (3,822.4) (3,656.6)
Net impairment charges1 (+100%) (324.7) (55.5)
Operating expenses 4.1% (602.8) (628.7)
Profit from Continuing Operations (“PFCO”)
(53.1%) 130.6 278.7
Discontinued Operations +100% 12.9 (36.0)
Profit for the year (40.8%) 143.6 242.7
Net interest Margin (0.2%) 2.7% 2.9%
Cost-to-income ratio1 3.4% 57.1% 60.5%
1 – Contractual right to recover 2nd loss share from SLA partners effectively reduces net impairment charges. For accounting purposes off set against SLA Admin Fees.
Net interest income & Net Interest Margin (“NIM”)Adversely impacted by: Late rains resulting in late planting season Delayed loan book growth resulting in Interest income not being fully
realised Pre – payment penalty on early settlement on facility linked to
sovereign downgrade Interest expense on increased Funding liabilities incurred in
anticipation of asset growth during FY2019Q4Impairments linked to NPL’sNPL’s have increased by R1.0 billion due to: General agricultural and climatic conditions Persistent drought in western parts, specifically North West and
Western Free State Normalised Impairments R235.7m vs R55.5m, R89m is the loss share
absorbed by SLA partners and disclosed in accordance with IFRS9with no Income Statement Impact
Tongaat Hulett stage migration (from stage 1 to 2 in terms of IFRS9)Operating expenses Focus on cost management to reduce opex by R20m
Land Bank Presentation 32
Performance Overview
Summary of losses included in Other Comprehensive Income (“OCI”)
Other Comprehensive Income (“OCI”) Var % FY2019 FY2018
Items that will be reclassified into profit or loss
Losses on Financial Assets designated through OCI 99.3% (0.3) (44.9)
Cash flow hedges: (losses)/ gains on cash flow hedging instruments
(+100%) (8.1) 8.1
Items that will not be reclassified into profit or loss
Actuarial loss on post-retirement obligation 66.4% (8.0) (23.8)
Revaluation of land and buildings +100% 0.9 0.2
Total Other Comprehensive Income 74.3% (15.5) (60.4)
Net losses on Financial Assets through OCI PY significant share price drop in listed investment i.e.
Rhodes Food Group and CY limited volatility in listedinvestment as well as stability in the valuation ofunlisted investments.
Actuarial Valuation on PRMA The Bank concluded a buy-out agreement i.r.o some
“pensioners” at a cost of R82.7 million which resulted ina significant reduction of actuarial losses at year end anda reduction in PRMA liability
Actuarial loss PRMA
-44.9
TotalOCI
Fin Assets through OCI
-8.0
-15.5
-60.4
-0.3
-23.8
2019
2018
Land Bank Presentation 33
Performance Overview: Balance Sheet
Statement of Financial Position – Strong asset and liability profile
Var %FY2019R’000
FY2018R’000
Cash and cash equivalents 35.6% 3,202.6 2,362.1
Net loans and advances 2.4% 44,465.5 43,418.5
Investments 41.3% 1,988.0 1,406.7
Assets of Discontinued Operations classified as held-for-sale (LDFU)
(95.7%) 6.3 147.3
Other assets 89.4% 753.7 398.0
Total assets 5.6% 50,416.1 47,732.6
Capital and reserves 2.3% 5,675.0 5,546.9
Liabilities 7.6% 44,741.1 42,185.7
- Funding liabilities 6.4% 44,257.9 41,576.3
- Other liabilities (20.7%) 483.2 609.4
Total equity and liabilities 5.6% 50,416.1 47,732.6
Cash and cash equivalents Increase of R1.0bn due to cash not being
disbursed due to slow loan book growth
Net loans and advances The loan book increased by 2.4%,
however excluding the impact of theProfert & Silico transactions as well asnormalised uptake in loans of R1.0bn thebook would have grown by 8.0% in linewith Agricultural inflation.
Investments Increase mainly due to successful
resolution of Profert, via asset for shareswap.
Other Assets Increased as a result of recognition of
Finance Lease assets in terms of IFRS 16,increases in Properties in possession, andderivative assets
Assets of Discontinued Operations - LDFU The Bank successfully sold all but one of
the properties in this legacy portfolio.
Funding Liabilities Timing mismatch as funding was
increased in anticipation of loan growth,which was however slow to materialise.
350
1,250
260128
1,988
350565
345146
1,407
Investment in subsidiaries
Unlisted equities PRMA Assets Listed equities Total
FY2019
FY2018
Investments
Land Bank Presentation 34
Performance Overview
Loan Book segmentation – Significant contribution by indirect channels
76.6%
23.4%
CB&SI CDBB
Loan bookFY2019
CDBB (Delivery Channel) – R’bn
0
30
5
25
24.3
1.0
7.2 7.0
Direct Indirect - SLA
26.5
0.9
Indirect - WFF
FY2019
FY2018
0
12
14
16
SI - Equity
1.3
10.6
0.6
13.2
Direct
FY2018
FY2019
CB&SI (Delivery Channel) – R’bn
29.1%
70.9%
Loan bookFY2018
Commercial Development Business Bank (CDBB)
Direct:
Flat year-on-year. Transactions are low value, high volume.
Indirect – SLA:
Growth of 9%, in line with Agricultural inflation of between 8% and 10%.
Indirect – WFF: Flat year-on-year. Development transactions of low value, high volume.
Corporate Bank & Structured Investments (CB&SI)
Direct: year-on-year decrease as a result of the successful workout ofProfert, as well as the SiloCo. Transactions resulting in ca. R3.0 billiondecrease.
SI – Equity: increase in book is attributable to the successful asset forshare swap regarding the Profert transaction, as well as successful landingof SiloCo transaction.
Land Bank Presentation 35
Performance Overview
Loan Book performance
Loan bookFY2019
CDBB - %
0
5
10
15
20
6.7%11.3%
8.6% 9.4%
Total NPL
15.6%
Direct NPL
18.6%
Indirect NPL
FY2019
FY2018 2.0
0.0
0.5
1.0
2.5
1.5
2.0%
0.5%
2.0%
Total NPL
0.5%
Direct NPL
FY2019
FY2018
CB&SI - %
85.7%
7.6%6.7%
Loan bookFY2018
NPL’s have increased by R1.0 billion due to: Persistent drought in western parts, specifically North West and the western Free State.
NPL ratio “base effect” due to: R3.0 billion asset decline Excluding “base effect” the NPL ratio is 8.3%
82.1%
9.1%
8.8%
Stage 2: Under-performing loans
Stage 1: Performing loans
Stage 3: Non-performing loans
Land Bank Presentation 36Land Bank Presentation 36
Performance Overview
Loan Book segmentation – growth in Transformation loans
Delivery Channel Segmentation
5.6 5.8
25.9
0.8
5.01.5
0.6
0.00
5
10
15
20
25
30
Direct CB&SI Direct CDBB Indirect SLA Indirect WFF
Transformation
Commercial
CDBB = Commercial Development Business Bank
CB&SI = Corporate Bank & Structured Investments
Direct = Lending activities through Land Bank’s own infrastructure
Indirect = Lending activities through intermediary partners, i.e. SLA, or WFF
*The transformation book has increased substantially from12% in FY2018 to 17% in FY2019 as a result of concerted effortsto impact the development mandate.
14.2 13.7 15.321.4 26.2
32.1 35.5 36.5 38.4 40.6 37.30.0 0.0 0.01.0
1.72.0
2.3 2.54.9 5.0 7.9
6.4%
11.3% 12% 17%
0%
5%
10%
15%
20%
25%
0
10
20
30
40
50
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Transformation
Commercial
Transformation as a % of total loan book
Land Bank Presentation 37Land Bank Presentation 37
Performance Overview
Strong capital adequacy position
0.0%
16.5%
17.0%
17.5%
FY2018
-0.2%
Capital Movements (T1 + T2)
-0.2%
RWA FY2019Guarantee
16.4%
17.3%
-0.5%
-0.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
10.8%
5.5%
FY2018
5.7%
10.9%
1.1%
FY2017
1.1%
10.7%
5.2%
0.4%
FY2019
17.7% 17.3%16.4%
-0.4%-0.9%
Guarantees Tier 2 Capital Tier 1 Capital CAR Covenant
Total capital adequacy ratioFollowing Land Bank’s voluntary introduction of a number of theBasel Accord’s capital and liquidity risk management practicesduring FY2016, the Bank’s balance sheet has been significantlystrengthened.
The Basel-like principles include: Capital Adequacy Ratio (CAR) Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR)
Board approved deviations:
CAR Inclusion of Government guarantees as Capital Supply
LCR High quality liquid assets Roll-over rates
CAR has declined due to: R90m drawdown on World Bank
guarantee which is included as sourcesof “Capital Supply”.
Tier 2 capital benefit lost as a result oflower NPL coverage, largely due to thesuccessful resolution of the Proferttransaction.
Increase in RWA due to loan growth.
Land Bank Presentation 38
Performance Overview
Strong Funding and Liquidity position
Net stable funding ratio
86.7%
108.6%102.0%
80.0%90.0%
100.0%
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
120%
FY2017 FY2019FY2018
+21.9%-6.6%
Cash
1,000
3,000
0
2,500
2,000
500
1,500
3,500
FY2017 FY2018 FY2019
1,211
2,362
3,203+95.1%
+35.6%Liquidity Cover Ratio
60%70%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
200%
0%
50%
100%
150%
550%
85.0%
FY2017 FY2018 FY2019
549.8%
214.3%
+129.3%
+335.5%
LCR LCR Target
R m
illio
n
NSFR TargetNSFR
Cash and cash equivalents Cash requirements are driven by LCR. Increase of R1.0bn due to cash not being disbursed due to
slow than anticipated loan book growth. Access to R2.15 billion Committed and R0.5 billion
uncommitted facilities. All facilities currently undrawn.LCR Increased cash levels relative to 30 day outflow
requirements.NSFR Stable funding negatively impacted by increased maturities
within 12 months.
Land Bank Presentation 39
Insurance
Financial Overview
Land Bank Presentation 40
Performance Overview: ST Insurance
High claims ratio resulting in underwriting losses
During the 2017/18 season, LBIC suffered unusually high claims whichresulted in some claims of ca. R46 million being settled in the currentseason 2018/2019. The IBNR raised to absorb such claims was basedon the BN169 methodology which resulted in lower reserves. For thecurrent season a more risk based methodology was applied.
Net premiums have increased over the past three financial periodsbut underwriting profit has been adversely affected by a high level ofclaims, as reported.
This season`s rainfall started much later and was followed by severehail storms that resulted in a large number of hail claims towards theend of the season.
The number of policies underwritten between FY2018 & FY2019reduced substantially. Better pricing of policies assured that GWPdidn’t reduce in the same ratio.
537 543504
386
513568
5,697 5,576
0
1,000
2,000
3,000
4,000
5,000
6,000
0
100
200
300
400
500
600
FY2017
5 119
FY2018 FY2019
Gross Premium Gross Claims Policies
FY2019 FY2018 FY2017
Statement of P&L and OCI – R’m
Underwriting loss (54.9) (68.1) (18.6)
- Net premium 153.5 138.4 130.5
- Net commission (24.1) (38.8) (17.6)
- Net claims (164.4) (147.4) (113.1)
- Operating expenses (19.9) (20.3) (18.4)
Investment income 15.0 17.1 15.9
Net (loss)/ profit (37.7) (35.6) (2.7)
Claims ratio 107% 107% 87%
Statement of Financial Position – R’m
Cash 5.7 38.6 293.5
Investments 197.0 292.1 -
Short-term insurance assets 254.0 282.4 178.5
Trade and other receivables 585.7 270.3 324.6
Other assets 0.5 0.1 70.0
Total Assets 1,042.9 883.5 868.6
Equity 224.6 282.3 317.9
Short-term insurance liabilities 329.9 398.9 260.2
Trade and other payables 468.4 197.5 288.5
Total Equity and Liabilities 1,042.9 883.5 868.6
Land Bank Presentation 41
Performance Overview: Life Insurance
Volatility in investment returns
The investment portfolio performance has not been in line withexpectations as a result of, amongst other:
Local equities had a very mixed 12 months depending on the index usedto measure performance. The All Share index has returned 5.0% whilethe Capped SWIX has returned -2.6% in the past 12 months.
Resources were the main drivers of the returns over the past 12months returning 41.6% while Industrials and Financials were bothnegative returning -3.7% and -5.8% respectively over the past 12months.
Local bonds had a good month (1.3%) but had a tough 12 month periodreturning 3.5%.
The rand has been 22.6% weaker against the US dollar over the past 12months, a big portion of this has been US dollar strength, against theEuro and Pound the rand was down by 11.5% and 13.8% respectively.
Offshore equities were up in 4.3% in rand terms for the month and
returned 28.2% for the past year
Notwithstanding the above, LBLIC remains well capitalised andprofitable.
0
2
4
6
8
10 8.5%
5YR
6.2%
3YR1 YR
5.6% 5.1%
8.8% 8.9%
Actual Target (CPI + 4%)
FY2019 FY2018 FY2017
Statement of P&L and OCI – R’m
Underwriting loss (1.0) (9.9) (12.7)
- Net premium 3.4 4.6 4.9
- Net commission (0.2) (0.5) (0.7)
- Net claims (1.5) (5.6) (1.5)
- Net movement in policyhoder liabilities
4.2 (1.8) (7.4)
- Operating expenses (6.9) (6.6) (8.0)
Investment income 76.3 57.0 66.0
Net (loss)/ profit 75.3 47.1 53.3
Statement of Financial Position – R’m
Cash 4.9 20.3 15.5
Investments 1,346.5 1,271.2 1,226.9
Long-term insurance assets 7.9 10.8 12.1
Trade and other receivables 19.2 9.1 8.9
Other assets 0.1 0.1 0.1
Total Assets 1,378.6 1,311.5 1,263.5
Equity 1,244.8 1,169.5 1,122.4
Long-term insurance liabilities 47.1 55.9 54.8
Trade and other payables 86.7 86.1 86.3
Total Equity and Liabilities 1,378.6 1,311.5 1,263.5
Land Bank Presentation 42
Funding Matters
Land Bank Presentation 43
Funding Matters
Strong credit rating supports funding profile• Land Bank procures funding for two distinct business
purposes:
Commercial Operations
Development Operations
• Limited sources of capital
• Heavily reliant on volatile debt capital markets
Commercial Funding:
• Funding is raised from Institutional Investors and CommercialBanks
• Funding is generally unguaranteed
• Funding is applied for:
Corporate/ wholesale on-lending
Corporate and commercial agribusiness
Financing “primary” agriculture
Financing “secondary” agriculture through the valuechain
General working capital requirements
Development Funding:
• Funding is raised from Multilateral Institutions
• Funding often requires Government Guarantees
• Funding is applied for:
Agricultural “sector growth”
Sector transformation in terms of ownership
Emerging farmers
Development funding is ring-fenced and have strict disbursementconditions and reporting requirements.
Credit Rating:
• Land Bank is rated by Moody’s
• Global Scale Issuer Rating: Baa3 (linked to Sovereign rating)
• National Scale Issuer Rating: Aa1.za
• Last rating: 25 July 2019
• Outlook: Negative
Development Finance Institutions
Rating Land Bank DBSA IDC
GSIR Baa3 Baa3 Baa3
NSIR Aa1.za Aa1.za Aa1.za
Commercial Banks
Rating ABSA First Rand Investec Nedbank SBSA
GSIR Baa3 Baa3 Baa3 Baa3 Baa3
NSIR Aa1.za Aaa.za Aa1.za Aa1.za Aa1.za
Land Bank Presentation 44
Funding Matters
Reducing reliance on short-term funding
In line with Land Bank’s commitment to reduce reliance on short-term funding, the Bank has made great strides inextending the maturity profile, thereby reducing refinancing risk and improving general liquidity levels of the Bank.
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
FY2015 FY2019FY2016 FY2017 FY2018
30.6%
69.4%
54.8%
45.2%
56.4%
43.6% 43.2%
56.8%
50.0% 50.0%
+63.4%
-28.0%
ST Funding (maturities < 12 months) Term Funding
Land Bank Presentation 45
Funding Matters
Diversified Investor Base
Land Bank’s investor relations strategy is bearing fruit. Renewed investor confidence is evident with the Bank seeing increased support from existing funders as well as new investors/ funders. The Bank has also seen a return of investors that had previously left the Bank. The Bank has a well diversified investor base across local debt capital markets, as well as foreign funding relationships with Banks and multilaterals.
11.3%
56.6%50.9%
24.9%80.9%
41.1%
24.2%
0%
20%
40%
60%
80%
100%
7.8%
FY2009
2.3%
FY2013 FY2019
+350.4%
PIC & CPD
Banks
Institutional & Other
Land Bank Presentation 46
Looking Forward
• Drive profit through top-line growth
• Targeting asset growth of R6 billion
• Identify alternative funding solutions
• NPL Rehabilitation
• Continued cost management
• Implementation of Digitization strategy
• Chanel optimization
• Product diversification
Land Bank Presentation 47
Integrated Results Launch FY2018/19
Questions & Answers
Land Bank Presentation 48Land Bank Presentation 48
Corporate Gifts:Enterprise Development …… (1/3)
The Heart felt project
A Social Enterprise set up in the rural community of Makapanstad. Theymake handmade gifts that are individually hand sewn by the HEARFELTLadies .Each one is made with love and purposefully designed to changesomeone’s life. By ordering our corporate gifts, you’ll be able to not only helpsupport the lady who made it, but also give back to her little community.
Land Bank Presentation 49Land Bank Presentation 49
Corporate Gifts:Enterprise Development …… (2/3)
Lesedi la Batho project
This is a Christian faith-based NGO that seeks to inspire, empower, motivate,engage and equip the youth and the community at large through sport,education, skills training and social enterprise development, communitywellness and arts and culture. At the event we will be supporting the KAGO– ENTLE project which is a free–trade project that is supplying localcompanies with quality, unique products for corporate gifting.
Land Bank Presentation 50Land Bank Presentation 50
Corporate Gifts:Enterprise Development …… (3/3)
Mapula Embroidery Project
The ongoing Mapula Embroidery Project initiated 26 years ago, in theWinterveld is still one of the important community art projects in SouthAfrica. Over the years women have been economically empowered throughthe sale of their products. A working Trust, called the Mapula EmbroideryTrust, with 7 trustees was registered in December 2016.
Land Bank Presentation 51
• 420 Witch-Hazel Avenue
• Eco Glades, Block D, Eco Park
• Centurion Pretoria
THANK YOU!
www.landbank.co.za
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